Asia Plus Securities (ASPS) recommends investing in real estate stocks with high growth and dividends that are outpacing inflation as it expects the government to extend the easing of the loan-to-value (LTV) ratio and transfer fees for mortgage lending for another year to support the economic recovery.
Analysts at ASPS said the Ministry of Finance and Bank of Thailand are considering extending the real estate stimulus measures that are set to end this year. The policies include a reduction in the transfer and mortgage fees to 0.01% for houses valued at less than 3 million baht and the raising of the LTV ratio to 100%.
The research department at ASPS explained that a recovering Thai economy, rising inflation, and growing interest rates would influence the decision of house buyers and the extension of such policies would help stimulate home buying and benefit both sellers and buyers.
However, ASPS remains sceptical that the measures will have a significant impact on the market if they are only applicable to houses that are priced at less than 3 million baht as houses at that price level account for only 30% of the total market value.
The measures would make a larger impact if they were amended to include houses costing up to 5 million baht as that would cover up to 60% of the market, he said.
The analysts also explained that stimulating the housing sector would have a "multiplier effect" and benefit all other industries within the economy.
The analysts expect earnings of real estate stocks to recover and remain attractive in the second half of 2022 as the current decline in share prices has resulted in low valuations and laggard prices.
The brokerage recommends investing in real estate stocks that have an upside of over 15% and a dividend yield of 5% per year, including AP, ORI, LH and SC.